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Banks, crypto and discrimination: shifting regulatory terrain
In recent years, the relationship between banks and crypto-related customers has become fraught. Many banks in the UK and beyond have taken a restrictive stance toward customers who deal in crypto-assets. The reasons for such restrictions include fears around money-laundering, fraud and regulatory confusion. But as the regulatory regime evolves, banks may face greater scrutiny — and even fines — if they act arbitrarily or blanket ban lawful crypto activity.
Why banks restrict crypto-activity
Banks argue that crypto-asset transactions carry higher risk:
• According to industry data, UK banks say that fraud losses for payments labelled as going to crypto-asset services (merchant category code 6051) are 12-13 times higher than for standard payments.
• Certain banks have publicly stated they will block payments to crypto-exchanges or refuse to accept transfers for crypto purchases. For example, Chase UK announced from 16 October 2023 that it would decline payments it considered “related to crypto assets”, citing a rise in scams.
• The regulatory framework for crypto in the UK is still less mature than for traditional finance. The Financial Conduct Authority (FCA) regulates some crypto-asset service providers (CASPs) for anti-money-laundering (AML) purposes, but many banks feel exposed to risk if they facilitate transfers to less regulated crypto firms.
As a result, many banks adopt a risk-based (or risk-averse) approach: rather than assessing each customer or transaction on its merits, some appear to impose broad restrictions on crypto-related activity (or on customers or businesses they identify as “crypto”).
Is it discrimination (or “de-banking”)?
From the crypto-industry’s point of view, the problem is that these bank decisions can appear overly broad, lacking transparency or being inconsistent with the principles of fairness or competitive access. For example:
• The industry trade body CryptoUK has warned that many major UK banks are implementing blanket bans or restrictions on transactions to crypto firms “instead of taking a risk-based and case-by-case approach”.
• A recent survey found 40 % of UK crypto-investors reported their payments to buy crypto had been blocked or delayed by their bank.
This raises questions: if a bank closes or restricts a customer simply because they deal with crypto, is that a legitimate risk-management decision — or is it unfair discrimination (especially if the customer is otherwise compliant)? And, importantly: might regulators step in?
When banks get fined — and why
While much of the regulatory action to date has focused on crypto-firms and CASPs (crypto service providers) rather than banks discriminating against crypto customers, the regulatory landscape suggests banks must tread carefully. Two things to note:
1. Banks can be fined for weak financial crime controls, even if they are not specifically targeting crypto customers.
• For instance, the FCA fined the digital bank Starling Bank £29 million in October 2024 for “shockingly lax” sanctions and anti-money-laundering systems, noting the bank had opened accounts for high-risk customers.
• Also, the FCA fined the CASP‐gateway CB Payments Limited (UK arm of Coinbase Group) £3.5 m for onboarding high-risk customers in breach of a voluntary requirement.
2. Banks’ unwillingness to deal with crypto firms may attract regulatory scrutiny, especially if it’s done without clear justification.
• CryptoUK has urged regulators to challenge banks that impose broad bans or deny services to registered, compliant crypto firms.
• The UK regulatory authorities have emphasised that financial sanctions and AML rules apply equally regardless of whether the underlying asset is “crypto” or not.
Thus, if a bank refuses to provide services to a crypto-business or customer despite evidence of compliance and legitimate business, it may face challenge — though, to date, there are no prominent public cases of banks being fined purely for discriminating against crypto customers. The fines have instead been for banks failing to apply sufficient controls.
What this means going forward
For writers, businesses and consumers navigating the bank/crypto space in the UK, here are some key take-aways:
• Banks will remain cautious: The regulatory environment for crypto remains high risk from the viewpoint of banks (fraud, AML, sanctions). They will continue to apply restrictions or higher scrutiny when dealing with crypto-custodians or exchanges.
• Crypto firms and customers should document compliance: If a crypto business is registered with the FCA (or meets equivalent AML/KYC standards) or a customer is transacting legitimately, they would be in a stronger position to challenge broad service denials.
• Regulators expect a risk-based approach: The regulatory expectation is that firms (and conceivably banks) treat each case individually (based on risk), rather than simply banning all crypto-activity. Blanket bans may raise concerns of unfair practice or competitive distortion.
• Future risks of fines: While banks have not yet been heavily fined for “crypto discrimination”, they are assuming risk when they either ignore crypto-related traffic (and let illicit activity go) or when they make unjustified blanket exclusions. As regulatory frameworks mature (including forthcoming stablecoin and crypto-asset regimes) the stakes will increase.
• Consumers should be aware: For individuals dealing with crypto, having a bank that facilitates transfers to compliant crypto platforms is important. If banks block payments, that may reflect risk policies rather than illegality — but it may also limit legitimate access. The survey showing 40% of crypto buyers in the UK faced blocked payments underlines this.
Suggested headline and opening
Headline: “When banks say ‘no’ to crypto – and how regulators might penalise unfair bans”
Opening paragraph:
As the UK banking sector tightens its grip on crypto-asset related activity, thousands of individuals and crypto businesses find their accounts restricted, payments blocked or services refused — often without clear justification. While banks argue this is justified risk management, the question emerges: when does risk management become unfair discrimination? And as regulators sharpen their focus on financial crime controls, could banks themselves face fines for indiscriminate “crypto de-banking”?
Closing thought
The crypto sector is at a crossroads: it needs access to banking services to operate but remains under-heightened regulatory and reputational scrutiny. Banks, who face huge sums in potential fines if they fail their AML/sanctions duties, may choose the safe route of broadly restricting crypto traffic rather than finely judging each case. That broad approach may be safe now, but as regulation catches up, banking decisions made for “risk avoidance” could open banks to challenge — and potentially, penalty.
Attached is a news article regarding banks can not discriminate crypto or they can be fined for debanking
https://subscriber.politicopro.com/article/2025/08/trump-banks-crackdown-debanking-00497145
Article written and configured by Christopher Stanley
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